Retirement must wait as older workers struggle to pay bills

Around 40 per cent of those born between April 6 1953 and April 5 1960 will be forced to work for an extra year when the state pension age rises to 66 – a change due to come into force by April 2020.

These people will not be in a position to live off their savings after they turn 65, so will need to seek employment for an extra year until their pension kicks in.

Steve Webb, pensions minister, disclosed how many people would be affected by the change in the state pension age in a Parliamentary answer this week.

Women were already seeing their retirement age rise from 60 to 65 before the coalition’s announcement that the process was being accelerated. Both men and women will then see their pension age rise gradually from 65 to 66 between 2018 and 2020.

Those currently older than 57 should not be affected by the changes, as they should retire before these latest changes come into effect.

Mr Webb said that the change to the state pension age would cost the average man £7,600 while women will lose nearly £7,250.

However, pensions expert Ros Altmann said that many people would lose considerably more, and added that many people will not be able to find work after 65.

Women born on April 6 1954 will work for an extra three years thanks to the changes, which will lose them £15,000 in income.

“This reply from Steve Webb is very disappointing,” Ms Altmann said.

“Some women will see their pension age rise by two years with very little notice and hardly much chance to find work. Some have already had to retire to look after relatives.” she said.

Currently, under nine per cent of over 65s are still in employment, meaning that the Government is expecting a huge increase in the number of older people working in just 10 years.

Those who cannot work will be forced to rely on unemployment benefits, “which will pay very little”, Ms Altmann said.

Government statistics out this week showed that unemployment has already hit the 2. 5 million mark, and Ms Altmann said that many older people would struggle to find jobs or stay in work. The Government is scrapping the default retirement age next April, but she fears that many people will still be subject to age discrimination, or physically unable to work.

Recent research from MetLife showed that only one in four fifty somethings is financially prepared for retirement, and a third have no retirement savings at all.

The change in state pension age will force these people to work long past the current retirement age of 65.

In addition, Plans are already in place to raise the state age from 66 to 68 between 2036 and 2046.

The Government reiterated in its Spending Review that it is considering bringing forward these dates, and may look at raising the pension age still further.